Courtesy of Good Year, 'Lean-Driven Innovation' Jean-Claude Kihn and Norbert Majerus have written an article introducing their presentation.

In a traditional industrial company, the importance of a function within a company is often judged by its contributions to the company — overall cost, people employed, etc. In most companies, R&D represents only a small fraction of the overall spend or the total number of employees, especially when compared to manufacturing, which consumes a high percentage of costs.

To understand the true impact of a function, its effect on earnings, revenues, and growth also must be realized. In this broader context, innovation and new products have a tremendous impact on a company’s results. As a company creates and sells great products it generates more earnings and growth.

This impact is illustrated by the “shadow” cast by a function. Rather than looking at the spend of a function, it’s importance to judge its impact on the company’s bottom-line results.

Work at the Broader R&D Level

To be efficient at innovating, it’s not enough to improve efficiency in the R&D function and its product development labs (i.e., reduce costs). The shadow effect tells us there is only so much to be gained there. Lean efforts must be undertaken at a broader level to get the maximum positive impact. Pursing the broader gains from R&D — e.g., revenue, profits, growth — however gets more complex and challenging as more areas of the company are involved. Departments, such as marketing and manufacturing, need to buy in and collaborate in improvements that they have traditionally perceived as someone else’s problem.

The initial, big undertaking is to align every department’s priorities. To align everyone, start with the customer: What you are doing to help the customer? What does the customer really want? While expense and throughput may drive corporate efficiency, they won’t satisfy customers, who want innovation as quickly as possible and as many new innovations as possible.

Lean innovation can positively impact both internal and customer requirements, but it requires awareness of where and how each is uniquely addressed. Many companies believe that there is a single innovation creation process, and that lean principles are applied equally across the process. In reality, there are two processes or phases — the creative front end and the execution/launch phase — and the goals of those two phases are drastically different as are the lean principles applied to achieve them. The goal of the creative phase is to generate lots of diverse designs, whereas the execution phase has to be very predictable, fast, and efficient.

The creative phase takes it’s clues from lean startup thinking. For example, consider how lean principles could apply to the fashion industry: Thousands of new garments are designed and made in small shops – just a few pieces from each – and then dispersed through stores at the beginning of the fashion season. Initial buying trends quickly show what sells best, and these items are then scaled up to mass production within weeks.

Popular lean principles that bring innovation creation close to this vision are short learning cycles (sprints) and an agile management of the deliverables. Sprints start with the most important questions (e.g., Does the technology exist? Is there a market for this idea?) and work their way down the list of go/no go questions to quickly sort the lesser concepts from the good ones. While executing the sprints, product teams focus on the minimum needed to represent the product and move on to the next question, eventually leading to a demo of a successful concept with crude prototypes and simple visuals.

The execution phase, however, resembles a manufacturing process and relies on lean principles like pull and kanbans. Pull techniques allow facilities to flow goods and material in a variable environment, and the kanbans allow them to assign resources to where the work is, eliminating waiting and promoting visibility for traditionally invisible R&D work.

Lastly, a lean innovation culture must exist in both phases, incorporating principles from iconic lean environments, such as the Toyota Production System: People are engaged in the design and implementation of R&D improvements. Individuals are empowered to improve the processes. There is respect for the people who create the innovation.

If implemented correctly, lean can create massive benefits in innovation — the creation phase and the execution phase — that dwarf those achieved in manufacturing settings.

About Goodyear Tire & Rubber Company

Goodyear Tire & Rubber Company is Goodyear is one of the world’s leading tire companies with operations in most regions of the world and one of the most recognized brand names. Together with its U.S. and international subsidiaries, Goodyear develops, manufactures, markets, and distributes tires for most applications. It also manufactures and markets rubber-related chemicals for various applications. Moreover, it is one of the world’s largest operators of commercial truck service and tire retreading centers. In addition, it operates approximately 1,100 tire and auto service center outlets where it offers its products for retail sale and provides automotive repair and other services. It has had considerable benefits with operational excellence since they embarked on this journey several years ago, but how have they sustained this in the organization? Download this slide deck to see Jean-Claude Kihn and Norbert Majerus discuss their journey, and learn aboutwhy innovations are essential for a company's growth and competitiveness as well as how companies make innovation successful, which achieved significant benefits for their organization.

About the Authors

Jean-Claude Kihn has been President of The Goodyear & Rubber Company’s Europe, Middle East and Africa (EMEA) business unit since January 1, 2016. Prior to this prestigious appointment, Mr. Kihn has previously served as President of The Goodyear Tire & Rubber Company’s Latin America business, Senior Vice President & Managing Director of Goodyear Brazil and as as the company’s Senior Vice President & Chief Technical Officer

Beginning in 2005, Norbert Majerus has implemented a principles-based lean product development process at the three global innovation centers of The Goodyear Tire & Rubber Company. For nearly a decade he has been Goodyear’s Lean Champion in research and development.

Mr. Majerus has a Master’s degree in Chemistry from the Universitaet des Saarlandes, Saarbruecken, Germany, and has worked most of the disciplines in the Goodyear innovation centers in Luxembourg and Akron. He recently published his first book “Lean-driven Innovation,” and he has spoken at many conferences in the USA and other countries

These slides were first presented at the Business Transformation and Operational Excellence World Summit (BTOES). To learn more, please visitbtoes.com.